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FelCor Lodging Trust Incorporated (NYSE: FCH), owns a diversified portfolio of primarily upper-upscale and luxury hotels that are located in major urban and resort markets. FelCor partners with top hotel companies that operate its properties under globally recognized names and as premier independent hotels.

Same-store RevPAR was $161.98 compared to $163.62 for the same period
in 2016.

Net loss attributable to FelCor common stockholders was $8.0 million,
or $0.06 per share, versus net income of $7.1 million, or $0.05 per
share, for the same period in 2016.

Adjusted FFO per share was $0.26 versus $0.32 for the same period in
2016.

Same-store Adjusted EBITDA was $65.0 million versus $67.9 million for
the same period in 2016.

“We are pleased to have completed the sale of Morgans New York and The
Royalton,” said Steven R. Goldman, FelCor’s Chief Executive Officer.
“Regarding our merger with RLJ, we are excited by the opportunity to
participate in creating a leading lodging REIT with a greater reach in
key markets, streamlined operating structure and improved cost of
capital. Our team is working diligently with RLJ to effect a timely
close and efficient transition.”

Second Quarter Hotel Results

Second Quarter

2017

2016

Change

Same-store hotels (36)

RevPAR

$

161.98

$

163.62

(1.0

)%

Total hotel revenue, in millions

$

211.9

$

212.7

(0.4

)%

Hotel EBITDA, in millions

$

69.2

$

72.3

(4.3

)%

Hotel EBITDA margin

32.7

%

34.0

%

(135) bps

RevPAR for our 36 same-store hotels was $161.98 compared to $163.62 for
the same period in 2016. The change reflects a 0.4% increase in
occupancy (to 83.2%) offset by a 1.4% reduction in average daily rate,
or ADR, (to $194.81). Hotel EBITDA for our 36 same-store hotels was
$69.2 million compared to $72.3 million, and Hotel EBITDA margin was
32.7% compared to 34.0% in the prior year quarter. RevPAR was
particularly affected by weakness at hotels in San Francisco, which
constitute 17% of our available rooms. Excluding this market, RevPAR
growth would have been 0.5% and margins would have been 34.0%.

Wyndham Worldwide Corporation has guaranteed minimum annual NOI for
eight of our hotels over the 10-year terms of the management agreements.
Hotel EBITDA for the three months ended June 30, 2017 includes
$1.4 million of fee reductions related to that guaranty compared to
$1.5 million during the same period last year.

See pages 12-14 and 18-23 for more detailed operating data.

Second Quarter Operating Results

Second Quarter

$ in millions, except for per share information

2017

2016

Change

Net income (loss) attributable to FelCor common stockholders

$

(8.0

)

$

7.1

$

(15.1

)

Net income (loss) per share

$

(0.06

)

$

0.05

$

(0.11

)

Same-store Adjusted EBITDA

$

65.0

$

67.9

(4.2

)%

Adjusted EBITDA

$

64.7

$

72.4

(10.6

)%

Adjusted FFO per share

$

0.26

$

0.32

$

(0.06

)

Net loss attributable to common stockholders was $8.0 million, or
$0.06 per share, in 2017, compared to net income of $7.1 million, or
$0.05 per share, for the same period in 2016. Net loss in 2017 includes
a $10.3 million impairment charge, reflecting further basis reduction
for two hotels held for sale at June 30, 2017. Net income for the same
period in 2016 includes a $6.3 million impairment charge attributable to
one hotel sold in the third quarter of 2016.

Year-to-Date Operating Results

Net loss attributable to common stockholders was $50.2 million, or
$0.36 per share, in 2017, compared to $4.1 million, or $0.03 per share,
for the same period in 2016. Net loss in 2017 includes an impairment
charge of $35.1 million, reflecting a reduction in basis for two hotels
held for sale at June 30, 2017. Net loss for the same period in 2016
includes an impairment charge of $6.3 million attributable to one hotel
sold in the third quarter of 2016.

RevPAR for our 36 same-store hotels was $151.99 compared to $153.45 for
the same period in 2016. The change reflects ADR of $192.20 compared to
$193.36 and 0.4% lower occupancy (to 79.1%). Hotel EBITDA for our 36
same-store hotels was $116.2 million compared to $121.8 million, and
Hotel EBITDA margin was 29.5% compared to 30.7%.

Adjusted FFO was $48.7 million ($0.35 per share) compared to
$64.3 million ($0.46 per share) for the same period in 2016.

Same-store Adjusted EBITDA was $107.0 million versus $112.4 million for
the same period in 2016.

EBITDA, Adjusted EBITDA, Same-store Adjusted EBITDA, Hotel EBITDA,
Hotel EBITDA margin, FFO, Adjusted FFO and Adjusted FFO per share are
all non-GAAP financial measures. See our discussion of “Non-GAAP
Financial Measures” beginning on page 14 for a reconciliation of each of
these measures to the most comparable GAAP financial measure and for
information regarding the use, limitations and importance of these
non-GAAP financial measures.

Balance Sheet

At June 30, 2017, we had $1.4 billion of consolidated debt with a 5.4%
weighted-average interest rate and a six-year weighted-average maturity.
We had $58.1 million of cash and cash equivalents on hand and
$24.2 million of restricted cash.

Asset Sales

We sold two hotels, Morgans New York in July 2017 and The Royalton in
August 2017, for $92 million in aggregate gross proceeds.

Common Dividend

We paid our second quarter common stock dividend of $0.06 per share at
the end of July.

Capital Expenditures

In 2016, we began redeveloping two resort properties (The Vinoy
Renaissance St. Petersburg Resort & Golf Club and Embassy Suites Myrtle
Beach-Oceanfront Resort). We completed our Myrtle Beach project last
quarter, as scheduled and under budget. Also, Phase I of our Vinoy
redevelopment is substantially complete and within budget. These
redevelopments are intended to enhance our portfolio quality and offer
attractive returns. During the six months ended June 30, 2017, we spent
$42.1 million on renovations and redevelopments at our hotels.

Outlook

As discussed in our prior earnings release, given our pending merger
with RLJ, we are not providing any further updates to our guidance for
the remainder of the year.

Merger with RLJ

On April 24, 2017, we announced that we had entered into a definitive
merger agreement under which we will merge with and into a wholly-owned
subsidiary of RLJ in an all-stock transaction. At closing, our
stockholders will receive 0.362 RLJ common shares for each share of our
common stock. The transaction is expected to close on August 31, 2017
and is subject to customary closing conditions, including the approval
of both companies’ shareholders at their respective special meetings on
August 15, 2017.

About FelCor

FelCor Lodging Trust Incorporated, a real estate investment trust, owns
a diversified portfolio of primarily upper-upscale and luxury hotels
that are located in major markets and resort locations throughout the
U.S. FelCor partners with top hotel companies that operate its
properties under globally renowned names and as premier independent
hotels. Additional information can be found on the Company’s website at www.felcor.com.

Disclosure Regarding Forward-Looking Statements

The information presented herein may contain forward-looking statements.
These forward-looking statements, which are based on current
expectations, estimates and projections about the industry and markets
in which FelCor and RLJ operate and beliefs of and assumptions made by
FelCor management and RLJ management, involve significant risks and
uncertainties, which are difficult to predict and are not guarantees of
future performances, that could significantly affect the financial
results of FelCor or RLJ or the combined company. Words such as
“projects,” “will,” “could,” “continue,” “expects,” “anticipates,”
“intends,” “plans,” “believes,” “seeks,” “estimates,” “forecast,”
“guidance,” “outlook,” “may,” and “might” and variations of such words
and similar expressions are intended to identify such forward-looking
statements, which generally are not historical in nature. Such
forward-looking statements may include, but are not limited to,
statements about the anticipated benefits of the proposed merger between
FelCor and RLJ, including future financial and operating results, the
attractiveness of the value to be received by FelCor stockholders, the
attractiveness of the value to be received by RLJ, the combined
company’s plans, objectives, expectations and intentions, the timing of
future events, anticipated administrative and operating synergies, the
anticipated impact of the merger on net debt ratios, cost of capital,
future dividend payment rates, forecasts of FFO accretion, projected
capital improvements, expected sources of financing, and descriptions
relating to these expectations. All statements that address operating
performance, events or developments that FelCor expects or anticipates
will occur in the future - including statements relating to expected
synergies, improved liquidity and balance sheet strength - are
forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. FelCor’s ability to predict
results or the actual effect of future events, actions, plans or
strategies is inherently uncertain. Although FelCor believes the
expectations reflected in any forward-looking statements are based on
reasonable assumptions, FelCor can give no assurance that our
expectations will be attained and therefore, actual outcomes and results
may differ materially from what is expressed or forecasted in such
forward-looking statements. Some of the factors that may materially and
adversely affect FelCor’s or the combined company’s business, financial
condition, liquidity, results of operations and prospects, as well as
the ability to make distributions to shareholders, include, but are not
limited to: (i) national, regional and local economic climates,
(ii) changes in the real estate industry, financial markets and interest
rates, or to the business or financial condition of either company or
business, (iii) increased or unanticipated competition for the
companies’ properties, (iv) risks associated with acquisitions,
including the integration of the combined companies’ businesses, (v) the
potential liability for the failure to meet regulatory requirements,
including the maintenance of REIT status, (vi) availability of financing
and capital, (vii) risks associated with achieving expected revenue
synergies or cost savings, (viii) risks associated with the companies’
ability to consummate the merger and the timing of the closing of the
merger, (ix) the outcome of any claims and litigation involving or
affecting either company, (x) applicable regulatory changes, and
(xi) those additional risks and factors discussed in reports filed with
the SEC by FelCor and RLJ from time to time, including those discussed
under the heading “Risk Factors” in our and RLJ’s Quarterly Reports on
Form 10-Q, Annual Reports on Form 10-K and our and RLJ’s other filings
with the SEC. Neither FelCor nor RLJ, except as required by law,
undertakes any duty to update any forward-looking statements appearing
in this document or any other document, whether as a result of new
information, future events or otherwise. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak
only as of the date hereof.

Important Information for Investors and Stockholders

In connection with the proposed merger described elsewhere in this
release, RLJ has filed with the SEC a registration statement on Form S-4
(File No. 333-218439), and RLJ and FelCor have filed with the SEC a
definitive joint proxy statement/prospectus, which was first mailed to
security holders of RLJ and FelCor on July 18, 2017. RLJ and FelCor
filed a supplement to the joint proxy statement/prospectus on August 7,
2017 and plan to file other relevant documents with the SEC regarding
the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE
URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ALL RELATED
SUPPLEMENTS AND AMENDMENTS THERETO AND ALL OTHER RELEVANT DOCUMENTS
FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the
joint proxy statement/prospectus and all related supplements and
amendments and all other relevant documents (if and when they become
available) filed by RLJ and FelCor with the SEC at the SEC’s website at www.sec.gov.
Copies of the documents filed by RLJ with the SEC will be available free
of charge on RLJ’s website at www.rljlodgingtrust.com
or by contacting RLJ Investor Relations at ir@rljlodgingtrust.com
or at 301-280-7774. Copies of the documents filed by FelCor with the SEC
will be available free of charge on FelCor’s website at www.felcor.com
or by contacting FelCor Investor Relations at asalami@felcor.com
or at 972-444-4967.

This document shall not constitute an offer to sell or the solicitation
of an offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the requirements
of Section 10 of the U.S. Securities Act of 1933, as amended.

Participants in the Solicitation

RLJ and FelCor and their respective trustees, directors and executive
officers and other members of management and employees may be deemed to
be participants in the solicitation of proxies in respect of the
proposed merger. You can find information about RLJ’s executive officers
and trustees in RLJ’s definitive proxy statement filed with the SEC on
March 28, 2017 in connection with its 2017 annual meeting of
shareholders and in Form 4s of RLJ’s trustees and executive officers
filed with the SEC. You can find information about FelCor’s executive
officers and directors in Amendment No. 1 to FelCor’s Annual Report on
Form 10-K for the year ended December 31, 2016 on Form 10-K/A filed with
the SEC on April 28, 2017 and in Form 4s of FelCor’s directors and
executive officers filed with the SEC. Additional information regarding
the interests of such potential participants is included in the joint
proxy statement/prospectus and other relevant documents filed with the
SEC in connection with the proposed merger. You may obtain free copies
of these documents from RLJ or FelCor using the sources indicated above.

SUPPLEMENTAL INFORMATION

INTRODUCTION

The following information is presented in order to help our investors
understand FelCor’s financial position as of and for the three and six
months ended June 30, 2017.

TABLE OF CONTENTS

Page

Consolidated Statements of Operations(a)

7

Consolidated Balance Sheets(a)

8

Consolidated Debt Summary

9

Schedule of Encumbered Hotels

10

Capital Expenditures

10

Total Enterprise Value

11

Hotel Operating Statistics

13

Historical Quarterly Operating Statistics

14

Non-GAAP Financial Measures

14

(a)

We have prepared our consolidated statements of operations and
balance sheets without an audit. Certain information and footnote
disclosures normally included in financial statements presented in
accordance with GAAP have been omitted. Our consolidated statements
of operations and balance sheets should be read in conjunction with
the audited consolidated financial statements and notes thereto
included in our most recent Annual Report on Form 10-K.

Consolidated Statements of Operations

(in thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

2017

2016

2017

2016

Revenues:

Hotel operating revenue:

Room

$

168,772

$

181,318

$

313,705

$

340,394

Food and beverage

37,921

43,697

69,995

83,229

Other operating departments

12,423

11,746

23,112

22,595

Other revenue

1,324

1,145

1,732

1,832

Total revenues

220,440

237,906

408,544

448,050

Expenses:

Hotel departmental expenses:

Room

43,483

44,748

84,161

87,447

Food and beverage

28,281

32,592

54,503

63,548

Other operating departments

3,947

4,039

7,480

7,822

Other property-related costs

52,220

56,007

103,075

111,573

Management and franchise fees

7,726

8,501

15,276

17,726

Taxes, insurance and lease expense

15,454

14,864

29,356

28,446

Corporate expenses

6,281

6,047

13,221

14,447

Depreciation and amortization

27,528

29,177

55,366

58,360

Impairment

10,271

6,333

35,109

6,333

Other expenses

7,331

2,142

8,591

2,970

Total operating expenses

202,522

204,450

406,138

398,672

Operating income

17,918

33,456

2,406

49,378

Interest expense, net

(19,416

)

(19,907

)

(38,702

)

(39,627

)

Other gains, net

100

100

100

100

Income (loss) before equity in income from unconsolidated entities

(1,398

)

13,649

(36,196

)

9,851

Equity in income from unconsolidated entities

648

726

518

572

Income (loss) from continuing operations before income tax

(750

)

14,375

(35,678

)

10,423

Income tax

(503

)

25

(1,050

)

(390

)

Income (loss) from continuing operations before loss on sale of
hotels

(1,253

)

14,400

(36,728

)

10,033

Loss on sale of hotels

(207

)

(630

)

(873

)

(1,344

)

Net income (loss) and comprehensive income (loss)

(1,460

)

13,770

(37,601

)

8,689

Net loss attributable to noncontrolling interests in other
partnerships

We refer in this release to certain “non-GAAP financial measures.” These
measures, including FFO, Adjusted FFO, EBITDA, Adjusted EBITDA,
Same-store Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin, are
measures of our financial performance that are not calculated and
presented in accordance with generally accepted accounting principles
(“GAAP”). The following tables reconcile each of these non-GAAP measures
to the most comparable GAAP financial measure. Immediately following the
reconciliations, we include a discussion of why we believe these
measures are useful supplemental measures of our performance and the
limitations of such measures.

Reconciliation of Net Income (Loss) to FFO and Adjusted FFO

(in thousands, except per share data)

Three Months Ended June 30,

2017

2016

Dollars

Shares

Per Share Amount

Dollars

Shares

Per Share Amount

Net income (loss)

$

(1,460

)

$

13,770

Noncontrolling interests

68

(15

)

Preferred dividends

(6,279

)

(6,279

)

Preferred distributions - consolidated joint venture

(367

)

(364

)

Net income (loss) attributable to FelCor common stockholders

(8,038

)

7,112

Less: Dividends declared on unvested restricted stock

(36

)

(35

)

Basic and diluted earnings per share data

(8,074

)

137,866

$

(0.06

)

7,077

138,182

$

0.05

Restricted stock units

—

—

—

—

496

—

Diluted earnings per share data

(8,074

)

137,866

(0.06

)

7,077

138,678

0.05

Depreciation and amortization

27,528

—

0.20

29,177

—

0.21

Depreciation, unconsolidated entities and other partnerships

464

—

—

469

—

—

Loss on sale of hotels

207

—

0.01

630

—

—

Other gains

(100

)

—

—

(100

)

—

—

Impairment

10,271

—

0.07

6,333

—

0.05

Noncontrolling interests in FelCor LP

(35

)

610

—

31

611

—

Dividends declared on unvested restricted stock

36

65

—

35

66

—

Conversion of unvested restricted stock units

—

287

—

—

—

—

FFO*

30,297

138,828

0.22

43,652

139,355

0.31

Transaction costs

5,844

—

0.04

—

—

—

Severance costs

—

—

—

27

—

—

Abandoned projects

—

—

—

383

—

0.01

Variable stock compensation

—

—

—

(789

)

—

(0.01

)

Litigation settlement

—

—

—

650

—

0.01

Pre-opening costs

532

—

—

191

—

—

Adjusted FFO*

$

36,673

138,828

$

0.26

$

44,114

139,355

$

0.32

* FFO and Adjusted FFO are attributable to FelCor common
stockholders and FelCor LP common unitholders other than FelCor.

Reconciliation of Net Income (Loss) to FFO and Adjusted FFO

(in thousands, except per share data)

Six Months Ended June 30,

2017

2016

Dollars

Shares

Per Share Amount

Dollars

Shares

Per Share Amount

Net income (loss)

$

(37,601

)

$

8,689

Noncontrolling interests

658

504

Preferred distributions - consolidated joint venture

(727

)

(724

)

Preferred dividends

(12,558

)

(12,558

)

Net loss attributable to FelCor common stockholders

(50,228

)

(4,089

)

Less: Dividends declared on unvested restricted stock

(73

)

(73

)

Basic and diluted earnings per share data

(50,301

)

137,820

$

(0.36

)

(4,162

)

138,930

$

(0.03

)

Depreciation and amortization

55,366

—

0.39

58,360

—

0.42

Depreciation, unconsolidated entities and other partnerships

918

—

0.01

936

—

0.01

Other gains

(100

)

—

—

(100

)

—

—

Impairment

35,109

—

0.25

6,333

—

0.05

Loss on sale of hotels

873

—

0.01

1,344

—

—

Noncontrolling interests in FelCor LP

(221

)

610

—

(17

)

611

—

Dividends declared on unvested restricted stock

73

47

—

73

22

—

Conversion of unvested restricted stock units

—

239

—

—

451

—

FFO*

41,717

138,716

0.30

62,767

140,014

0.45

Hurricane loss

17

—

—

—

—

—

Hurricane loss, unconsolidated entities

4

—

—

—

—

—

Severance costs

—

—

—

27

—

—

Transaction costs

6,317

—

0.05

—

—

—

Abandoned projects

—

—

—

615

—

—

Variable stock compensation

—

—

—

(27

)

—

—

Litigation settlement

—

—

—

650

—

0.01

Pre-opening costs

665

—

—

245

—

—

Adjusted FFO*

$

48,720

138,716

$

0.35

$

64,277

140,014

$

0.46

* FFO and Adjusted FFO are attributable to FelCor common
stockholders and FelCor LP common unitholders other than FelCor.

Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA
and Same-store Adjusted EBITDA

* EBITDA, Adjusted EBITDA and Same-store Adjusted EBITDA are
attributable to FelCor common stockholders and FelCor LP unitholders
other than FelCor.

Hotel EBITDA and Hotel EBITDA Margin

(dollars in thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

2017

2016

2017

2016

Same-store operating revenue:

Room

$

162,792

$

164,439

$

303,817

$

308,439

Food and beverage

36,977

37,501

67,912

68,195

Other operating departments

12,150

10,795

22,310

20,725

Same-store operating revenue(a)

211,919

212,735

394,039

397,359

Same-store operating expense:

Room

40,467

39,585

78,298

77,135

Food and beverage

26,948

27,395

51,790

52,372

Other operating departments

3,834

3,613

7,250

7,025

Other property-related costs

50,058

49,074

98,894

97,894

Management and franchise fees

7,727

7,786

15,151

16,245

Taxes, insurance and lease expense

13,693

12,946

26,409

24,851

Same-store operating expense(a)

142,727

140,399

277,792

275,522

Hotel EBITDA

$

69,192

$

72,336

$

116,247

$

121,837

Hotel EBITDA Margin

32.7

%

34.0

%

29.5

%

30.7

%

(a)

Excludes two hotels held for sale at June 30, 2017.

The following tables set forth the components of our Hotel EBITDA for
our same-store hotels (dollars in thousands):

Three months ended June 30, 2017

Same-store Hotels

Hotel Operating Revenue

Net Income (Loss)

Other Adjustments

Depreciation

Interest Expense

Hotel EBITDA

Hotel EBITDA Margin

Embassy Suites Atlanta-Buckhead

$

3,341

$

623

$

—

$

504

$

—

$

1,127

33.7

%

DoubleTree Suites by Hilton Austin

4,035

1,177

—

455

161

1,793

44.4

%

Embassy Suites Birmingham

2,701

319

—

402

292

1,013

37.5

%

The Fairmont Copley Plaza, Boston

18,378

2,247

1

2,194

412

4,854

26.4

%

Wyndham Boston Beacon Hill

7,318

2,504

—

951

—

3,455

47.2

%

Embassy Suites Boston-Marlborough

2,995

731

—

291

—

1,022

34.1

%

Sheraton Burlington Hotel & Conference Center

3,686

525

—

629

—

1,154

31.3

%

The Mills House Wyndham Grand Hotel, Charleston

6,203

2,219

—

596

212

3,027

48.8

%

Embassy Suites Dallas-Love Field

3,131

410

—

618

—

1,028

32.8

%

Embassy Suites Deerfield Beach-Resort & Spa

4,184

474

—

457

390

1,321

31.6

%

Embassy Suites Fort Lauderdale 17th Street

5,007

223

—

708

439

1,370

27.4

%

Wyndham Houston-Medical Center Hotel & Suites

3,115

715

(19

)

519

—

1,215

39.0

%

The Knickerbocker- New York

12,242

(293

)

85

2,570

981

3,343

27.3

%

Embassy Suites Los Angeles-International Airport/South

6,017

1,561

—

628

241

2,430

40.4

%

Embassy Suites Mandalay Beach-Hotel & Resort

5,788

1,491

—

766

—

2,257

39.0

%

Embassy Suites Miami-International Airport

3,631

59

—

462

—

521

14.3

%

Embassy Suites Milpitas-Silicon Valley

4,869

1,740

—

307

—

2,047

42.0

%

Embassy Suites Minneapolis-Airport

3,350

418

—

362

463

1,243

37.1

%

Embassy Suites Myrtle Beach-Oceanfront Resort

7,305

1,852

263

652

—

2,767

37.9

%

Hilton Myrtle Beach Resort

7,376

2,416

—

898

—

3,314

44.9

%

Embassy Suites Napa Valley

4,815

1,230

3

476

339

2,048

42.5

%

Wyndham New Orleans-French Quarter

4,240

1,229

—

714

—

1,943

45.8

%

Embassy Suites Orlando-International Drive South/Convention Center

3,236

485

—

537

—

1,022

31.6

%

DoubleTree Suites by Hilton Orlando-Lake Buena Vista

3,284

110

—

758

—

868

26.4

%

Wyndham Philadelphia Historic District

5,894

1,957

—

678

—

2,635

44.7

%

Sheraton Philadelphia Society Hill Hotel

7,129

1,645

—

962

—

2,607

36.6

%

Embassy Suites Phoenix-Biltmore

2,643

325

—

436

—

761

28.8

%

Wyndham Pittsburgh University Center

3,457

840

—

501

—

1,341

38.8

%

Wyndham San Diego Bayside

8,833

1,049

—

1,557

—

2,606

29.5

%

Embassy Suites San Francisco Airport-South San Francisco

5,925

1,585

—

422

—

2,007

33.9

%

Embassy Suites San Francisco Airport-Waterfront

7,010

1,594

—

739

—

2,333

33.3

%

Holiday Inn San Francisco-Fisherman’s Wharf

10,346

458

—

614

—

1,072

10.4

%

San Francisco Marriott Union Square

9,614

805

(110

)

1,300

495

2,490

25.9

%

Wyndham Santa Monica at the Pier

3,148

975

—

259

167

1,401

44.5

%

Embassy Suites Secaucus-Meadowlands

3,786

740

5

118

—

863

22.8

%

The Vinoy Renaissance St. Petersburg Resort & Golf Club

13,887

812

267

1,463

352

2,894

20.8

%

$

211,919

$

37,250

$

495

$

26,503

$

4,944

$

69,192

32.7

%

Three months ended June 30, 2016

Same-store Hotels

Hotel Operating Revenue

Net Income (Loss)

Other Adjustments

Depreciation

Interest Expense

Hotel EBITDA

Hotel EBITDA Margin

Embassy Suites Atlanta-Buckhead

$

3,928

$

934

$

—

$

604

$

—

$

1,538

39.2

%

DoubleTree Suites by Hilton Austin

3,901

955

—

492

190

1,637

42.0

%

Embassy Suites Birmingham

2,688

363

—

394

297

1,054

39.2

%

The Fairmont Copley Plaza, Boston

17,788

2,386

—

2,198

485

5,069

28.5

%

Wyndham Boston Beacon Hill

7,017

2,477

—

981

—

3,458

49.3

%

Embassy Suites Boston-Marlborough

3,203

850

—

297

—

1,147

35.8

%

Sheraton Burlington Hotel & Conference Center

3,979

584

—

622

—

1,206

30.3

%

The Mills House Wyndham Grand Hotel, Charleston

6,457

2,346

—

632

249

3,227

50.0

%

Embassy Suites Dallas-Love Field

2,875

535

—

349

—

884

30.7

%

Embassy Suites Deerfield Beach-Resort & Spa

4,233

429

—

476

397

1,302

30.8

%

Embassy Suites Fort Lauderdale 17th Street

5,092

242

—

712

447

1,401

27.5

%

Wyndham Houston-Medical Center Hotel & Suites

3,630

1,294

(19

)

550

—

1,825

50.3

%

The Knickerbocker- New York

11,736

(859

)

86

2,581

860

2,668

22.7

%

Embassy Suites Los Angeles-International Airport/South

5,548

1,328

—

634

285

2,247

40.5

%

Embassy Suites Mandalay Beach-Hotel & Resort

5,890

1,694

—

771

—

2,465

41.9

%

Embassy Suites Miami-International Airport

3,934

285

—

456

—

741

18.8

%

Embassy Suites Milpitas-Silicon Valley

4,706

1,551

—

301

—

1,852

39.4

%

Embassy Suites Minneapolis-Airport

3,630

477

—

433

472

1,382

38.1

%

Embassy Suites Myrtle Beach-Oceanfront Resort

6,857

1,575

227

658

—

2,460

35.9

%

Hilton Myrtle Beach Resort

6,666

1,888

—

875

—

2,763

41.4

%

Embassy Suites Napa Valley

4,518

1,095

—

518

345

1,958

43.3

%

Wyndham New Orleans-French Quarter

4,573

1,492

—

721

—

2,213

48.4

%

Embassy Suites Orlando-International Drive South/Convention Center

2,318

304

—

269

—

573

24.7

%

DoubleTree Suites by Hilton Orlando-Lake Buena Vista

3,259

93

—

775

—

868

26.6

%

Wyndham Philadelphia Historic District

5,831

1,819

10

734

—

2,563

44.0

%

Sheraton Philadelphia Society Hill Hotel

8,026

1,887

—

974

—

2,861

35.6

%

Embassy Suites Phoenix-Biltmore

2,640

403

—

431

—

834

31.6

%

Wyndham Pittsburgh University Center

3,473

806

3

516

—

1,325

38.2

%

Wyndham San Diego Bayside

8,163

1,275

—

1,560

—

2,835

34.7

%

Embassy Suites San Francisco Airport-South San Francisco

6,302

1,935

—

415

—

2,350

37.3

%

Embassy Suites San Francisco Airport-Waterfront

7,003

1,149

650

763

—

2,562

36.6

%

Holiday Inn San Francisco-Fisherman’s Wharf

10,925

1,447

—

495

—

1,942

17.8

%

San Francisco Marriott Union Square

10,809

1,372

(102

)

1,342

583

3,195

29.6

%

Wyndham Santa Monica at the Pier

3,108

1,316

1

279

197

1,793

57.7

%

Embassy Suites Secaucus-Meadowlands

3,764

782

1

122

—

905

24.0

%

The Vinoy Renaissance St. Petersburg Resort & Golf Club

14,265

1,212

179

1,427

415

3,233

22.7

%

$

212,735

$

39,721

$

1,036

$

26,357

$

5,222

$

72,336

34.0

%

Six months ended June 30, 2017

Same-store Hotels

Hotel Operating Revenue

Net Income (Loss)

Other Adjustments

Depreciation

Interest Expense

Hotel EBITDA

Hotel EBITDA Margin

Embassy Suites Atlanta-Buckhead

$

7,179

$

1,650

$

—

$

1,023

$

—

$

2,673

37.2

%

DoubleTree Suites by Hilton Austin

8,502

2,618

—

920

313

3,851

45.3

%

Embassy Suites Birmingham

5,162

444

1

802

582

1,829

35.4

%

The Fairmont Copley Plaza, Boston

27,985

(1,774

)

1

4,427

799

3,453

12.3

%

Wyndham Boston Beacon Hill

10,912

2,130

—

1,937

—

4,067

37.3

%

Embassy Suites Boston-Marlborough

5,162

898

—

579

—

1,477

28.6

%

Sheraton Burlington Hotel & Conference Center

6,240

96

—

1,249

—

1,345

21.6

%

The Mills House Wyndham Grand Hotel, Charleston

10,879

3,079

—

1,213

411

4,703

43.2

%

Embassy Suites Dallas-Love Field

6,263

763

—

1,225

—

1,988

31.7

%

Embassy Suites Deerfield Beach-Resort & Spa

9,804

2,259

—

925

778

3,962

40.4

%

Embassy Suites Fort Lauderdale 17th Street

12,672

2,563

1

1,422

875

4,861

38.4

%

Wyndham Houston-Medical Center Hotel & Suites

6,825

1,871

(39

)

1,060

—

2,892

42.4

%

The Knickerbocker-New York

19,824

(4,718

)

363

5,134

1,901

2,680

13.5

%

Embassy Suites Los Angeles-International Airport/South

11,925

3,013

—

1,257

469

4,739

39.7

%

Embassy Suites Mandalay Beach-Hotel & Resort

9,847

1,862

—

1,538

—

3,400

34.5

%

Embassy Suites Miami-International Airport

9,054

1,560

—

922

—

2,482

27.4

%

Embassy Suites Milpitas-Silicon Valley

9,465

3,095

—

615

—

3,710

39.2

%

Embassy Suites Minneapolis-Airport

5,973

225

1

727

924

1,877

31.4

%

Embassy Suites Myrtle Beach-Oceanfront Resort

11,103

1,410

266

1,306

—

2,982

26.9

%

Hilton Myrtle Beach Resort

10,335

1,359

14

1,783

—

3,156

30.5

%

Embassy Suites Napa Valley

8,168

1,296

3

959

676

2,934

35.9

%

Wyndham New Orleans-French Quarter

8,877

2,738

—

1,431

—

4,169

47.0

%

Embassy Suites Orlando-International Drive South/Convention Center

6,655

1,309

—

956

—

2,265

34.0

%

DoubleTree Suites by Hilton Orlando-Lake Buena Vista

6,954

454

—

1,523

—

1,977

28.4

%

Wyndham Philadelphia Historic District

9,075

1,702

(3

)

1,399

—

3,098

34.1

%

Sheraton Philadelphia Society Hill Hotel

11,716

1,285

—

1,929

—

3,214

27.4

%

Embassy Suites Phoenix-Biltmore

6,455

1,721

—

871

—

2,592

40.2

%

Wyndham Pittsburgh University Center

5,791

739

—

997

—

1,736

30.0

%

Wyndham San Diego Bayside

17,344

1,802

—

3,115

—

4,917

28.3

%

Embassy Suites San Francisco Airport-South San Francisco

11,600

2,887

—

865

—

3,752

32.3

%

Embassy Suites San Francisco Airport-Waterfront

13,663

2,917

1

1,524

—

4,442

32.5

%

Holiday Inn San Francisco-Fisherman’s Wharf

19,627

468

—

1,222

—

1,690

8.6

%

San Francisco Marriott Union Square

20,889

2,787

(116

)

2,603

961

6,235

29.8

%

Wyndham Santa Monica at the Pier

5,938

1,969

—

522

324

2,815

47.4

%

Embassy Suites Secaucus-Meadowlands

6,349

653

6

222

—

881

13.9

%

The Vinoy Renaissance St. Petersburg Resort & Golf Club

29,827

3,385

407

2,928

683

7,403

24.8

%

$

394,039

$

52,515

$

906

$

53,130

$

9,696

$

116,247

29.5

%

Six months ended June 30, 2016

Same-store Hotels

Hotel Operating Revenue

Net Income (Loss)

Other Adjustments

Depreciation

Interest Expense

Hotel EBITDA

Hotel EBITDA Margin

Embassy Suites Atlanta-Buckhead

$

7,970

$

2,037

$

—

$

1,238

$

—

$

3,275

41.1

%

DoubleTree Suites by Hilton Austin

7,886

2,158

—

974

372

3,504

44.4

%

Embassy Suites Birmingham

5,226

594

1

784

595

1,974

37.8

%

The Fairmont Copley Plaza, Boston

27,825

(757

)

(91

)

4,377

950

4,479

16.1

%

Wyndham Boston Beacon Hill

10,486

1,983

—

1,972

—

3,955

37.7

%

Embassy Suites Boston-Marlborough

5,771

1,224

—

593

—

1,817

31.5

%

Sheraton Burlington Hotel & Conference Center

6,690

179

—

1,243

—

1,422

21.3

%

The Mills House Wyndham Grand Hotel, Charleston

11,123

3,178

—

1,269

489

4,936

44.4

%

Embassy Suites Dallas-Love Field

5,982

1,176

—

686

—

1,862

31.1

%

Embassy Suites Deerfield Beach-Resort & Spa

10,428

2,529

—

953

796

4,278

41.0

%

Embassy Suites Fort Lauderdale 17th Street

13,048

2,713

1

1,424

895

5,033

38.6

%

Wyndham Houston-Medical Center Hotel & Suites

7,644

2,560

(38

)

1,104

—

3,626

47.4

%

The Knickerbocker-New York

17,690

(5,814

)

346

5,152

1,562

1,246

7.0

%

Embassy Suites Los Angeles-International Airport/South

11,221

2,558

—

1,276

558

4,392

39.1

%

Embassy Suites Mandalay Beach-Hotel & Resort

10,506

2,548

—

1,542

—

4,090

38.9

%

Embassy Suites Miami-International Airport

10,047

2,175

—

927

—

3,102

30.9

%

Embassy Suites Milpitas-Silicon Valley

9,477

3,070

—

603

—

3,673

38.8

%

Embassy Suites Minneapolis-Airport

6,556

347

1

877

945

2,170

33.1

%

Embassy Suites Myrtle Beach-Oceanfront Resort

11,051

1,343

228

1,333

—

2,904

26.3

%

Hilton Myrtle Beach Resort

9,720

930

—

1,723

—

2,653

27.3

%

Embassy Suites Napa Valley

8,072

1,246

1

1,035

691

2,973

36.8

%

Wyndham New Orleans-French Quarter

8,931

2,701

—

1,437

—

4,138

46.3

%

Embassy Suites Orlando-International Drive South/Convention Center

5,879

1,405

—

540

—

1,945

33.1

%

DoubleTree Suites by Hilton Orlando-Lake Buena Vista

7,156

587

—

1,541

—

2,128

29.7

%

Wyndham Philadelphia Historic District

8,855

1,308

10

1,483

—

2,801

31.6

%

Sheraton Philadelphia Society Hill Hotel

12,389

1,269

—

1,953

—

3,222

26.0

%

Embassy Suites Phoenix-Biltmore

6,790

2,039

—

869

—

2,908

42.8

%

Wyndham Pittsburgh University Center

5,615

484

3

1,035

—

1,522

27.1

%

Wyndham San Diego Bayside

15,245

1,330

—

3,131

—

4,461

29.3

%

Embassy Suites San Francisco Airport-South San Francisco

12,025

3,384

—

827

—

4,211

35.0

%

Embassy Suites San Francisco Airport-Waterfront

13,534

2,513

650

1,512

—

4,675

34.5

%

Holiday Inn San Francisco-Fisherman’s Wharf

20,396

1,743

—

975

—

2,718

13.3

%

San Francisco Marriott Union Square

22,738

3,745

(104

)

2,712

1,143

7,496

33.0

%

Wyndham Santa Monica at the Pier

6,080

2,306

1

562

386

3,255

53.5

%

Embassy Suites Secaucus-Meadowlands

6,141

543

1

243

—

787

12.8

%

The Vinoy Renaissance St. Petersburg Resort & Golf Club

31,166

4,292

233

2,869

812

8,206

26.3

%

$

397,359

$

57,626

$

1,243

$

52,774

$

10,194

$

121,837

30.7

%

Reconciliation of Same-store Operating Revenue and Same-store
Operating Expense to Total

Revenue, Total Operating Expense and Operating Income

(in thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

2017

2016

2017

2016

Same-store operating revenue

$

211,919

$

212,735

$

394,039

$

397,359

Other revenue

1,324

1,145

1,732

1,832

Revenue from held for sale and sold hotels(a)

7,197

24,026

12,773

48,859

Total revenue

220,440

237,906

408,544

448,050

Same-store operating expense

142,727

140,399

277,792

275,522

Consolidated hotel lease expense(b)

1,430

1,359

2,245

2,161

Unconsolidated taxes, insurance and lease expense

(536

)

(517

)

(973

)

(969

)

Corporate expenses

6,281

6,047

13,221

14,447

Depreciation and amortization

27,528

29,177

55,366

58,360

Impairment

10,271

6,333

35,109

6,333

Expenses from held for sale and sold hotels(a)

7,490

19,510

14,787

39,848

Other expenses

7,331

2,142

8,591

2,970

Total operating expense

202,522

204,450

406,138

398,672

Operating income

$

17,918

$

33,456

$

2,406

$

49,378

(a)

We include the operating performance for held for sale and sold
hotels in continuing operations in our Consolidated Statements of
Operations. However, for purposes of our non-GAAP reporting metrics,
we have excluded the results of these hotels to provide a meaningful
same-store comparison.

(b)

Consolidated hotel lease expense represents the percentage lease
expense of our 51%-owned operating lessees. The offsetting
percentage lease revenue is included in equity in income from
unconsolidated entities.

Substantially all of our non-current assets consist of real estate.
Historical cost accounting for real estate assets implicitly assumes
that the value of real estate assets diminishes predictably over time.
Since real estate values instead have historically risen or fallen with
market conditions, most industry investors consider supplemental
measures of performance, which are not measures of operating performance
under GAAP, to be helpful in evaluating a real estate company’s
operations. These supplemental measures are not measures of operating
performance under GAAP. However, we consider these non-GAAP measures to
be supplemental measures of a hotel REIT’s performance and should be
considered along with, but not as an alternative to, net income (loss)
attributable to FelCor as a measure of our operating performance.

FFO and EBITDA

The National Association of Real Estate Investment Trusts (“NAREIT”)
defines Funds From Operations (“FFO”) as net income or loss attributable
to parent (computed in accordance with GAAP), excluding gains or losses
from sales of property, plus depreciation, amortization and impairment
losses. FFO for unconsolidated partnerships and joint ventures is
calculated on the same basis. We compute FFO in accordance with
standards established by NAREIT. This may not be comparable to FFO
reported by other REITs that do not define the term in accordance with
the current NAREIT definition or that interpret the current NAREIT
definition differently than we do.

Earnings Before Interest, Taxes, Depreciation and Amortization
(“EBITDA”) is a commonly used measure of performance in many industries.
We define EBITDA as net income or loss attributable to parent (computed
in accordance with GAAP) plus interest expenses, income taxes,
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures are calculated to reflect EBITDA on the
same basis.

Adjustments to FFO and EBITDA

We adjust FFO and EBITDA when evaluating our performance because
management believes that the exclusion of certain additional items
provides useful supplemental information to investors regarding our
ongoing operating performance and that the presentation of Adjusted FFO,
and Adjusted EBITDA when combined with GAAP net income attributable to
FelCor, EBITDA and FFO, is beneficial to an investor’s understanding of
our operating performance.

Gains and losses related to extinguishment of debt and interest
rate swaps - We exclude gains and losses related to extinguishment
of debt and interest rate swaps from Adjusted FFO and Adjusted EBITDA
because we believe that it is not indicative of ongoing operating
performance of our hotel assets. This also represents an acceleration
of interest expense or a reduction of interest expense, and interest
expense is excluded from EBITDA.

Cumulative effect of a change in accounting principle -
Infrequently, the Financial Accounting Standards Board promulgates new
accounting standards that require the consolidated statements of
operations to reflect the cumulative effect of a change in accounting
principle. We exclude these one-time adjustments in computing Adjusted
FFO and Adjusted EBITDA because they do not reflect our actual
performance for that period.

Other expenses and costs - From time to time, we incur expenses
or transaction costs that are not indicative of ongoing operating
performance. Such costs include, but are not limited to, conversion
costs, acquisition costs, pre-opening costs, severance costs and
certain non-cash adjustments. We exclude these costs from the
calculation of Adjusted FFO and Adjusted EBITDA.

Variable stock compensation - We exclude the cost associated
with our variable stock compensation. This cost is subject to
volatility related to the price and dividends of our common stock that
does not necessarily correspond to our operating performance.

In addition, to derive Adjusted EBITDA, we exclude gains or losses on
the sale of depreciable assets and impairment losses because including
them in EBITDA is inconsistent with reporting the ongoing performance of
our remaining assets. Additionally, the gain or loss on sale of
depreciable assets and impairment losses represents either accelerated
depreciation or excess depreciation in previous periods, and
depreciation is excluded from EBITDA. We also exclude the amortization
of our fixed stock and directors’ compensation, which is included in
corporate expenses and is not separately stated on our statements of
operations. Excluding amortization of our fixed stock and directors’
compensation maintains consistency with the EBITDA definition.

Hotel EBITDA and Hotel EBITDA Margin

Hotel EBITDA and Hotel EBITDA margin are commonly used measures of
performance in the hotel industry and give investors a more complete
understanding of the operating results over which our individual hotels
and brands/managers have direct control. We believe that Hotel EBITDA
and Hotel EBITDA margin are useful to investors by providing greater
transparency with respect to two significant measures that we use in our
financial and operational decision-making. Additionally, using these
measures facilitates comparisons with other hotel REITs and hotel
owners. We present Hotel EBITDA and Hotel EBITDA margin in a manner
consistent with Adjusted EBITDA, however, we also eliminate all revenues
and expenses from continuing operations not directly associated with
hotel operations, including other income and corporate-level expenses.
We eliminate these additional items because we believe property-level
results provide investors with supplemental information regarding the
ongoing operational performance of our hotels and the effectiveness of
management on a property-level basis. We also eliminate consolidated
percentage rent paid to unconsolidated entities, which is effectively
eliminated by noncontrolling interests and equity in income from
unconsolidated subsidiaries, and include the cost of unconsolidated
taxes, insurance and lease expense, to reflect the entire operating
costs applicable to our consolidated hotels. Hotel EBITDA and Hotel
EBITDA margins are presented on a same-store basis.

Use and Limitations of Non-GAAP Measures

We use FFO, Adjusted FFO, EBITDA, Adjusted EBITDA, Same-store Adjusted
EBITDA, Hotel EBITDA and Hotel EBITDA margin to evaluate the performance
of our hotels and to facilitate comparisons between us and other hotel
REITs, hotel owners who are not REITs and other capital intensive
companies. We use Hotel EBITDA and Hotel EBITDA margin in evaluating
hotel-level performance and the operating efficiency of our hotel
managers.

The use of these non-GAAP financial measures has certain limitations. As
we present them, these non-GAAP financial measures may not be comparable
to similar non-GAAP financial measures as presented by other real estate
companies. These measures do not reflect certain expenses or
expenditures that we incurred and will incur, such as depreciation,
interest and capital expenditures. We compensate for these limitations
by separately considering the impact of these excluded items to the
extent they are material to operating decisions or assessments of our
operating performance. Our reconciliations to the most comparable GAAP
financial measures, and our consolidated statements of operations and
cash flows, include interest expense, capital expenditures, and other
excluded items, all of which should be considered when evaluating our
performance, and the usefulness of our non-GAAP financial measures.

These non-GAAP financial measures are used in addition to and in
conjunction with results presented in accordance with GAAP. They should
not be considered as alternatives to operating profit, cash flow from
operations or any other operating performance measure prescribed by
GAAP. These non-GAAP financial measures reflect additional ways of
viewing our operations that we believe, when viewed with our GAAP
results and the reconciliations to the corresponding GAAP financial
measures, provide a more complete understanding of factors and trends
affecting our business than could be obtained absent this disclosure. We
strongly encourage investors to review our financial information in its
entirety and not to rely on any single financial measure.